Canada Allows Firms To Fix Bid Errors

Apr. 15, 2013 - 07:58AM
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VICTORIA, British Columbia — The Canadian government has introduced a provision to allow defense firms to repair their bids on military equipment programs. The provision is an attempt to head off situations in which companies vying for a contract are disqualified over minor infractions.

Over the past two years, Canada has disqualified a number of bids for military programs because of a draconian system that prohibits any errors, even minor ones, in bid proposals. The disqualifications have delayed projects and have cost companies millions of dollars, industry sources say.

The new process would allow companies to submit more information to meet the bid requirements, even after bidding is closed.

While industry sources laud the initiative, others worry it opens the door to manipulating the system.

The move comes after all bids for the Integrated Soldier System Project — a program to purchase a suite of equipment including weapon accessories, electronic devices and sensors for dismounted Canadian Army infantry — were rejected in January. The government stipulated that companies had to meet more than 2,500 requirements and failing just one would cause a bid to be rejected.

A bid by Thales Canada was rejected because one official involved in the company’s proposal lacked the proper security clearance, according to government and industry representatives. The name of the individual, a health and safety officer, had been submitted in error and Thales asked Public Works to remove the name from its bid. Instead, Public Works refused and disqualified the bid. Public Works is the government department that oversees the procurement process.

Thales went to the Canadian International Trade Tribunal to protest the decision, but that organization determined there was not enough evidence to determine that Public Works improperly rejected the bid.

Public Works rejected another company’s bid for the project because information provided in two charts outlining spare parts acquisition did not exactly match up.

The Integrated Soldier System Project is being restarted using the new procurement approach on a pilot basis, Public Works spokeswoman Annie Duguay wrote in an email.

Defense industry officials say the more flexible approach could be used on other military procurement programs if the pilot is successful.

“The results will be closely monitored and taken into consideration in our efforts to continuously improve the way we procure,” Duguay wrote, adding that early feedback from industry has been positive.

Tim Page, president of the Canadian Association of Defence and Security Industries, welcomed the change.

“We think any opportunity for the government not to use a sledge hammer approach [on procurement issues] is a good thing,” said Page, whose organization represents 945 defense firms in Canada.

“Any way for the government to exercise some reasonable discretion that doesn’t affect the reasonableness of a procurement is of value.”

That lack of flexibility on the part of Public Works also contributed to all bids being disqualified for the Canadian Army’s Close Combat Vehicle program in 2010 and again in 2012, according to industry representatives. In one case, a company’s bid for the 2 billion Canadian dollar ($1.98 billion) project was disqualified because during testing it provided German-made ammunition for its vehicle turret machine gun instead of U.S.-made ammunition of the same caliber, which had been stipulated. The firm offered to quickly provide the required ammunition, but Public Works rejected the bid.

A spokesman for Thales Canada said the company hopes the new provision is added to future military procurements.

“What I have seen is that you have the senior leadership of the government saying they want to have open dialogue with industry, that it needs to be more of a give and take, but what we see at the actual implementation level is that there is little to no room for communication once the request for proposals is let,” said Conrad Bellehumeur, the company’s vice president of external relations.

But others say it opens up the bidding process to potential manipulation.

“It could be used as a loophole to favor a company that should be disqualified and to give them a second chance at bidding,” said one defense industry executive. “I can see this as opening the way to potential abuse.”

Page said he doesn’t believe the change will allow abuse of the system.

“If you’ve got knowledgeable and experienced procurement officers in the federal government who understand the business of procurement, then the risk of abuse will be significantly reduced,” he said.

Such flexibility on defense procurements is common in other countries, Page added.